Long Term Capital Gain on sale of Flat received as Gift
This query is : Resolved
02 February 2021
My father had purchased a flat in 1975 for Rs. 50000. In the year 2017 he made a gift deed and transferred 50% share in my name. Now in the year 2021 we are planning to sell this flat.
Please let me know what would be the year of indexation and the purchase cost since it was purchased in the year 1975 much before the base year of 1981 and 2000 which are now considered as the base year for indexation.
Do we need to have any valuation report since it is an old property. Please guide.
Please let me know what would be the year of indexation and the purchase cost since it was purchased in the year 1975 much before the base year of 1981 and 2000 which are now considered as the base year for indexation.
Do we need to have any valuation report since it is an old property. Please guide.
02 February 2021
In your case, The transection will attract Long Term Capital Gain.
In case of gift, the period of holding and cost of acquisition will be treated as in the hand of previous owner.
Since the property was purchased before 2001, the cost of acquisition shall be the FMV as on 01.04.2001 (up to max the SDV as on 01.04.2001) according to your portion in the property.
In case of gift, the period of holding and cost of acquisition will be treated as in the hand of previous owner.
Since the property was purchased before 2001, the cost of acquisition shall be the FMV as on 01.04.2001 (up to max the SDV as on 01.04.2001) according to your portion in the property.
02 February 2021
* Base year of indexation is Financial year 2001-2002.
Inference :- (i) section 55(2)(b).
(ii) CIT Vs. Manjula J Shah 16 Taxman 42(Bom)
* Valuation report for the cost as on 01-04-2001 will help to substantiate the cost.
PS:- I have hoisted a writing regarding this in https://www.caclubindia.com/articles/cost-of-acquisition-of-a-capital-asset-acquired-u-s-49-1-ii-iii-a-of-the-income-tax-act-1961-17790.asp
Inference :- (i) section 55(2)(b).
(ii) CIT Vs. Manjula J Shah 16 Taxman 42(Bom)
* Valuation report for the cost as on 01-04-2001 will help to substantiate the cost.
PS:- I have hoisted a writing regarding this in https://www.caclubindia.com/articles/cost-of-acquisition-of-a-capital-asset-acquired-u-s-49-1-ii-iii-a-of-the-income-tax-act-1961-17790.asp
03 February 2021
Thank you very much for your replies. I would like to know since the indexation year will be 2001 - 02 what would be the Purchase price (i.e. Rs. 1 lakh in 1975) be computed. Is it necessary to have a valuation report as on 01.04.2001 or is there any other means to work out the Purchase price as on 01.04.2001. Will the Stamp Duty Valuation as on 01.04.2001 be of any help. Please guide
03 February 2021
No need for a valuation report, you can go with the stamp duty value as on 01.04.2001.
05 February 2021
Thank you so much for your guidance and prompt replies.
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